Hedge Funds Are Betting On First Financial Corp (THFF)

We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Ackman’s recent Valeant losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards First Financial Corp (NASDAQ:THFF).

First Financial Corp (NASDAQ:THFF) has experienced an increase in hedge fund sentiment recently. THFF was in 7 hedge funds’ portfolios at the end of September. There were 4 hedge funds in our database with THFF positions at the end of the previous quarter. At the end of this article we will also compare THFF to other stocks, including FairPoint Communications Inc (NASDAQ:FRP), Koppers Holdings Inc. (NYSE:KOP), and El Pollo LoCo Holdings Inc (NASDAQ:LOCO) to get a better sense of its popularity.

Today there are a large number of methods that stock traders put to use to grade stocks. A duo of the best methods are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the top picks of the best fund managers can beat their index-focused peers by a healthy margin (see the details here).

Keeping this in mind, we’re going to take a look at the latest action surrounding First Financial Corp (NASDAQ:THFF).

What does the smart money think about First Financial Corp (NASDAQ:THFF)?

Heading into Q4, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a surge of 75% from the second quarter. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Jim Simons’s Renaissance Technologies has the biggest position in First Financial Corp (NASDAQ:THFF), worth close to $4.4 million, comprising less than 0.1% of its total 13F portfolio. On Renaissance Technologies’s heels is Bryn Mawr Capital, led by Ken Gray and Steve Walsh, holding a $2.8 million position; 0.5% of its 13F portfolio is allocated to the stock. Some other peers that are bullish comprise Alexander Medina Seaver’s Stadium Capital Management, Israel Englander’s Millennium Management and John Overdeck and David Siegel’s Two Sigma Advisors.

Now, key hedge funds were breaking ground themselves. Bryn Mawr Capital, managed by Ken Gray and Steve Walsh, established the biggest position in First Financial Corp (NASDAQ:THFF). According to its latest 13F filing, the fund had $2.8 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $0.9 million investment in the stock during the quarter. The only other fund with a new position in the stock is Ken Griffin’s Citadel Investment Group.

Let’s also examine hedge fund activity in other stocks similar to First Financial Corp (NASDAQ:THFF). We will take a look at FairPoint Communications Inc (NASDAQ:FRP), Koppers Holdings Inc. (NYSE:KOP), El Pollo LoCo Holdings Inc (NASDAQ:LOCO), and Metro Bancorp Inc (NASDAQ:METR). This group of stocks’ market caps match THFF’s market cap.

As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $75 million. That figure was just $12 million in THFF’s case. FairPoint Communications Inc (NASDAQ:FRP) is the most popular stock in this table, while El Pollo LoCo Holdings Inc (NASDAQ:LOCO) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks First Financial Corp (NASDAQ:THFF) is even less popular than LOCO. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.